James Pethokoukis is a columnist and blogger at the American Enterprise Institute. (Previously, he was Washington columnist for Reuters Breakingviews, the opinion and commentary wing of Thomson Reuters.) In addition, he is an official CNBC contributor.
Pethokoukis has written for many publications, including The New York Times, The Weekly Standard, Commentary, National Review, The Washington Examiner, and The Daily.
Pethokoukis has appeared numerous times on MSNBC, Fox News Channel, Fo… [more]

Only in an era of depressingly diminished expectations could the September jobs report be called a good one. It really isn’t. Not at all.

1. Yes, the U-3 unemployment rate fell to 7.8%, the first time it has been below 8% since January 2009. But that’s only due to a flood of 582,000 part-time jobs. As the Labor Department noted:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) rose from 8.0 million in August to 8.6 million in September. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

2. And take-home pay? Over the past 12 months, average hourly earnings have risen by just 1.8 percent. When you take inflation into account, wages are flat to down.

3. The broader U-6 rate — which takes into account part-time workers who want full-time work and lots of discouraged workers who’ve given up looking — stayed unchanged at 14.7%. That’s a better gauge of the true unemployment rate and state of the American labor market.

4. The shrunken workforce remains shrunken. If the labor force participation rate was the same as when President Obama took office, the unemployment rate would be 10.7%. If the participation rate had just stayed steady since the start of the year, the unemployment rate would be 8.4% vs. 8.3%. Where’s the progress? Here is RDQ Economics:

Such a rapid decline in the unemployment rate would be consistent with 4%–5% real economic growth historically but much of the decline is accounted for by people dropping out of the labor force (over the last year the employment-population ratio has risen to only 58.7% from 58.4%). We believe part of the drop in the unemployment rate over the last two months is a statistical quirk (the household data show an increase in employment of 873,000 in September, which is completely implausible and likely a result of sampling volatility). Moreover, declining labor force participation over the last year (resulting in 1.1 million people disappearing from the labor force) accounts for much of the rest of the decline.

5. The artificially depressed 7.8% unemployment rate is way above the 5.6% unemployment rate the White House predicted for September 2012 if Congress passed the $800 billion stimulus package back in 2009.

6. The 114,000 jobs created would have been a good number … but for 1962, not 2012. The U.S. economy needs 2-3 times that number every month to close the jobs gap (which is the number of jobs that the U.S. economy needs to create in order to return to pre-recession employment levels while also absorbing the people who enter the labor force each month.) At 114,000 jobs a month, the jobs gap would not close until after 2025, according to the Hamilton Project.

7. We are still on pace to create fewer jobs this year than last year. In 2012, employment growth has averaged 146,000 per month, compared with an average monthly gain of 153,000 in 2011.

8. White House economist Alan Krueger says the jobs numbers are ”further evidence” the economy is healing. But he’s wrong.

The employment-population ratio, which merely shows how many folks have jobs as a share of the civilian population, was 58.7%. Now that’s up from last month. But it is still far below where it was in June 2009, 59.4%,when the recession officially ended. And it’s even further below the 63% level before the downturn.

Bottom line: The U.S. labor market remains in a deep depression with virtually no recovery since the official end of the Great Recession. But the Long Recession continues unabated.

Looking back at the revisions doesn’t give much confidence either. July and August job gains were revised up by a net +86K, but the revisions in government were from a July number of -21K to +18K, and in August from -7K to +45K, meaning an overall revision of +91K (+39K July and +52K August).

Also, Education & Health Services added +49K last month, almost all of which were in Health Care. Looking over the past decade, health care productivity is negative. Growth in government and an unproductive health care sector is not the way to fuel long term economic growth.

If the economy continued to lose jobs at the same rate as when Obama took office the unemployment rate would be over 40%. What I wrote was silly, but so is what you wrote. Is this report better than the reports of the last six months? Probably a little, but not much. What does it mean other than both Bush and Obama have done exceedingly poor jobs, probably that the American people continue to find ways to be productive despite the leadership in DC, but they are finding it increasingly difficult to do so. Unfortunately we will have either another moderate Republican or liberal running things come 2013 and this may well prove to be the straw that broke the camel’s back.

When Bush was president you could have said we had 108% employment. Unemployment was 3% and we had 5 – 10 million more “undocumented” workers doing the jobs US citizens would not do. I love how the Bush economy started 3 months before the end of his second term.

I’m terrible at math, so can anyone tell me if I’ve done this correctly or if it even makes any sense?

The labor force participation rate was 65.7% in January, 2009. Now it’s 63.6%. That’s a difference of 2.1%There were 154,236,000 people in the labor force in January, 2009. Last month there were 155,063,000 There were 234,757,991 (=154,236,000/65.7%) adults of working age in January, 2009. Last month, 243,809,748.There were 12,049,000 people filing for unemployment benefits in January, 2009. Last month, 12,088,000.Take last month’s 243,809,748 and multiply by 2.1% to get 5,120,000. That’s the number of additional people who would be in the labor force today if that participation rate were the same in 9/12 as 1/09. They are people who have given up looking for work. If they hadn’t given up looking for work, then there would have been 17,139,582 people unemployed in September, 2012.(con’t)

If those 5.1 million people were still included in the labor force participation numbers, IE, if the labor force participation rate were the same today as it was in January, 2009, when Obama took office, then the total labor force participation (=unemployed+employed) would be 160,183,005.17,139,582 (unemployed) / 160,183,005 (total labor force) = 10.7% unemployment rate.

Something seems off about the household survey. I’m not sure ‘sampling volatility’ is a reasonable explanation. July’s survey showed 142.2 million employed, August was 142.101 million, and suddenly September is 142.974 million?

In comparison, the employer survey for July shows 181,000 jobs created, for August 142,000 jobs created, and September 114,000 jobs created. A record of declining job growth.

So how does the employer survey show a declining gain, but the household survey shows a spike of 873,00 new jobs? That seems to be outside the range of ‘sampling volatility’.

And I’m generally not one for conspiracy theories, but I do have to point out that the household survey is not carried out by the BLS, but by the Census Bureau. And I believe that in 2009 the head of the Census Bureau had his management structure changed to report directly to the White House instead of reporting to the Commerce Department – a complaint which raised a lot of concerns about political involvement in the census..

Leave it to Jimmy P. (as Kudlow likes to call him) to bring us back to reality, good stuff. The point the White House will bury is that the jobs being “created” pay much less than the ones we’ve lost (h/t Michael Medved), hence lower average household income.

The good news? Obama’s debate performance and Romney’s demolition of Obama’s straw men have certainly introduced a new skepticism about any claim Obama makes.

If things are so great, as obama says, then why did the Chairman of the Federal Reserve, Ben Bernanke, open the flood gates by printing money at the rate of $40 billion a month to decrease unemployment?

Paul-FB: If things are so great, as obama says, then why did the Chairman of the Federal Reserve, Ben Bernanke, open the flood gates by printing money at the rate of $40 billion a month to decrease unemployment? · 2 minutes ago

If this is such good news, where are the Obama ads proclaiming, “Unemployment Down to 7.8%! Re-elect Obama to continue the recovery!”?

Obama keeps reminding us that when he took office we were “in the midst of the worst economic collapse since the Great Depression.” The unemployment rate is that same as when he was inaugurated. Does that mean we’re back in the worst economic collapse? ;-)

Albert Arthur: Obama keeps reminding us that when he took office we were “in the midst of the worst economic collapse since the Great Depression.” The unemployment rate is that same as when he was inaugurated. Does that mean we’re back in the worst economic collapse? ;-) · 7 minutes ago